Woodside says it will operate any LNG development that results from exploration of the site, while Texas-based Noble Energy, a partner in the joint venture, will operate the overall development.

"Leviathan is truly a world-class field that offers significant development opportunities through the growing Israeli domestic gas market and Asian and European export markets, while also having additional exploration upside," Mr Coleman said.

In a note on the agreement, City Index chief market analyst Peter Esho said the deal was not as risky as it may appear.

"The big prize will be Woodside operating any LNG development," Mr Esho said.

"This will make Woodside one of the most sought-after strategic players in energy markets as Western European nations finally find practical diversification solutions to over-reliance on Russian energy."

The deal is subject to approval by governments and regulators, and the completion of due diligence.

Shares in Woodside Petroleum closed nearly one per cent higher today, at $34.11.